Stevens added that down payment alone is not the only factor that determines loan performance, pointing to credit score as a major indicator as well.

He highlighted an example where loans with a loan-to-value ratio above 95 percent and a Fico score above 580 perform better than loans with a loan-to-value below 95 percent and a Fico score below 580.

“In particular, we have proposed to permit loans to borrowers with FICO scores above 580 with a minimum 3.5% downpayment and loans to borrowers with FICO scores between 500 to 579 with a minimum 10% downpayment,” he said.

“It is also worth noting that these downpayment guidelines are minimums and many borrowers do in fact have significantly lower LTVs – in the fourth quarter of FY 2009, more than 21% of endorsed loans had a LTV lower than 90%.”